Posted To: MBS CommentaryCPI (the Consumer Price Index) has been the most relevant economic report on the horizon since the balmy NFP report from 2 weeks back. Reason being: NFP contained a strong wage growth component, and that always generates some fear among bond traders that higher wages will translate to higher inflation. Economists aren’t exactly expecting a big uptick in tomorrow’s CPI data, but that’s precisely why it’s been something of a risk. In other words, if CPI were to come in much stronger than expected tomorrow morning, it could dampen spirits in the bond market. Of course CPI could always come in weaker too–which would cast even more doubt on the ability of wages to translate to inflation in the current economic cycle. It’s not that it hasn’t been happening, just that it hasn’t…(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.